Financial Daily from THE HINDU group of publications
Wednesday, Oct 30, 2002
Industry & Economy - Disinvestment
Nalco incidents add new twist to divestment tale
NEW DELHI, Oct. 29
NOBODY in the Government will hazard a guess on what will happen to the proposed privatisation of National Aluminium Company Ltd (Nalco) through the strategic sale route after the Monday incidents at Angul and Damanjodi.
For the record, the due diligence exercise which took off on an acrimonious note on Monday involving the A.V. Birla Group, has been suspended.
"Let's see what happens at the November 3 meeting called by the Prime Minister, Mr A.B. Vajpayee, to discuss the manner in which the Government's disinvestment programme is wobbling along of late without any clear-cut direction," a Disinvestment Ministry official said.
A team of executives from the A.V. Birla group-promoted Hindalco accompanied by the Government's advisors ABN Amro-Enam-Rothschild consortium was roughed up and stopped from entering Nalco's smelter unit at Angul in Orissa when it was proceeding to conduct due diligence.
At Nalco's refinery in Damanjodi, the Hindalco officials had to bid a hasty retreat after being jeered by the company employees.
The Disinvestment Ministry is surprised at these developments as nothing of this kind had happened in the two months after the Government had announced the plan for disinvestment in Nalco.
"We suspect that this was the handiwork of outsiders hired by those opposed to the sale," the sources said.
The Government is selling 10 per cent of Nalco's equity in the domestic market, 20 per cent through American Depository Receipts (ADR) offering, followed by a 29.15 per cent strategic sale which will complete the three-stage disinvestment plan in the domestic aluminium maker.
The public statements made by the Biju Janata Dal leader and Orissa Chief Minister, Mr Naveen Patnaik, against the sale of Nalco seem to have given enough leeway for "lumpen elements" to strike terror among the shortlisted bidders.
The Union Government also has to contend with the pronouncements made by the Mines Minister, Ms Uma Bharati, on the sale of Nalco. "The public stand of the Union Mines Minister has also emboldened the detractors to take up arms against the sale," the sources said. With this kind of response awaiting the bidders at all the units of Nalco, none of the short-listed companies would risk physical harm to their employees and go for the due diligence exercise unless adequate security is provided to them. These include big names such as Sterlite, Alcoa, BHP-Hilton and Glencore.
"We will have to consult the State Government in this regard," Ministry sources said.
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